Second association joins fight against Garamendi

The Alliance of Insurance Agents and Brokers, La Verne, Calif., is drafting a letter to the California Office of Administrative Law in support of the recent petition by IBA West over the California Insurance Commissioner’s attempt to set as precedent the recent settlement with American Reliable Insurance Co.

The petition alleges that the settlement of the Commissioner’s Order to Show Cause against American Reliable for engaging insurance brokers who charged broker fees while performing acts on behalf of the insurer is an underground regulation because the matter was not adjudicated in a court of law.

The decision sets forth 12 circumstances in which the commissioner claims that a broker would be deemed an agent and therefore precluded from charging broker fees.

“This is a broad and inappropriate use of a settlement that has the effect of creating a regulation applicable to all producers,” said Robert W. Hogeboom, legal counsel for the Alliance and senior partner of the Los Angeles law firm Barger & Wolen LLP. “The commissioner overstepped the boundaries of his office and bypassed the law of the land by creating regulation without following accepted and required regulatory adoption procedure.”

Support of IBA West’s petition was endorsed unanimously by the Alliance’s Executive Board during its annual Convention and Expo, held on Sept. 27-Oct. 1 in Indian Wells, Calif., as well as by agent and broker members, and the consumers they serve.

“The handwriting is on the wall,” said Board President Gary Jensen. “The Commissioner must play by the rules. We are assessing a legal challenge following the response from the Office of Administrative Law.”